Michigan Office of AG goes after prediction markets

• The Michigan Office of Attorney General has filed a lawsuit against KalshiEx LLC, accusing the prediction market platform of violating the state’s sports betting laws
• Attorney General Dana Nessel argues the company is offering sports wagering under the guise of financial trading products
• The legal action seeks to stop Kalshi from operating in the state without approval from the Michigan Gaming Control Board

The Office of the Attorney General of Michigan has become the latest to go after prediction markets in the United States, with AG Dana Nessel filing a lawsuit against KalshiEx, LLC (Kalshi).

The complaint runs a similar language that prediction markets encroach on state laws, with AG Nessel specifically suggesting that Kalshi is breaching Michigan’s Lawful Sports Betting Act (LSBA), which regulates the sports gambling space in the Great Lakes State.

Michigan seeks to prove that Kalshi breaks local gambling law

Therein lies the kernel of the issue, as gaming regulators and prediction markets have been debating - in court - whether the product qualifies under this definition or rather constitutes a form of financial product instead.

A recently-launched trade group called Gambling Is Not Investing has also outright called prediction markets a form of gambling, and so have other courts and regulators.

The Michigan complaint seeks an order of abatement and injunctive relief to halt prediction markets operating in the state. The official press release spells out that Kalshi’s trading markets invite residents to engage in the activity, which is alleged to constitute sports gambling, but under the "guise" of financial products.

Without the necessary approval from the Michigan Gaming Control Board (MGCB), AG Nessel finds this operation to be in breach of LSBA. In a statement, AG Nessel added:

"Corporations cannot circumvent state gaming laws. My office will hold those who sidestep Michigan’s consumer protections accountable and ensure that betting in our state remains lawful, fair, and subject to the oversight our residents expect and deserve."

The lawsuit was filed with the InghamCounty Circuit Court, and it will - in all likelihood - go the distance, as Kalshi is unlikely to back down. The company has been litigating - sometimes preemptively - with gaming regulators and states seeking to block its products locally.

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